PHILIPPINE PORTS AUTHORITY,
petitioner, vs. WILLIAM GOTHONG & ABOITIZ
(WG&A), INC., respondent.
Remedial Law; Pleadings and
Practice; Amendments; The import of Section 3, Rule 10 of
the 1997 Rules of Civil Procedure emphasized in Valenzuela
v. Court of Appeals, 363 SCRA 779 (2001), is that under the
new rules, the amendment may (now) substantially alter
the cause of action or defense.The Court has emphasized
the import of Section 3, Rule 10 of the 1997 Rules of Civil
Procedure in Valenzuela v. Court of Appeals, 363 SCRA 779
(2001), thus: Interestingly, Section 3, Rule 10 of the 1997
Rules of Civil Procedure amended the former rule in such
manner that the phrase or that the cause of action or
defense is substantially altered was strickenoff and not
retained in the new rules. The clear import of such
amendment in Section 3, Rule 10 is that under the new rules,
the amendment may (now) substantially alter the cause of
action or defense. This should only be true, however, when
despite a substantial change or alteration in the cause of
action or defense, the amendments sought to be made shall
serve the higher interests of substantial justice, and
prevent delay and equally promote the laudable objective of
the rules which is to secure a just, speedy and inexpensive
disposition of every action and proceeding.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
The Government Corporate Counsel for petitioner.
Arthur D. Lim for respondent.
AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review
on Certiorari filed by the Philippine Ports Authority
(petitioner) seeking the rever-
_______________
* THIRD DIVISION.
515
VOL. 542, JANUARY 515
28, 2008
Philippine Ports Authority vs.
William Gothong & Aboitiz
(WG&A), Inc.
sal of the Decision of the Court of Appeals (CA)
1
promulgated on October 24, 2002 and its Resolution
dated May 15, 2003.
The antecedent facts are accurately narrated by the
CA as follows:
Petitioner William Gothong & Aboitiz, Inc. (WG&A for
brevity), is a duly organized domestic corporation engaged
in the shipping industry. Respondent Philippine Ports
Authority (PPA for brevity), upon the other hand, is a
government-owned and controlled company created and
existing by virtue of the provisions of P.D. No. 87 and
mandated under its charter to operate and administer the
countrys sea port and port facilities.
After the expiration of the lease contract of Veterans
Shipping Corporation over the Marine Slip Way in the
North Harbor on December 31, 2000, petitioner WG&A
requested respondent PPA for it to be allowed to lease and
operate the said facility. Thereafter, then President Estrada
issued a memorandum dated December 18, 2000 addressed
to the Secretary of the Department of Transportation and
Communication (DOTC) and the General Manager of PPA,
stating to the effect that in its meeting held on December 13,
2000, the Economic Coordinating Council (ECC) has
approved the request of petitioner WG&A to lease the
Marine Slip Way from January 1 to June 30, 2001 or until
such time that respondent PPA turns over its operations to
the winning bidder for the North Harbor Modernization
Project.
Pursuant to the said Memorandum, a Contract of Lease
was prepared by respondent PPA containing the following
terms:
1. 1.The lease of the area shall take effect on January 1
to June 30, 2001 or until such time that PPA turns
over its operation to the winning bidder for the
North Harbor modernization;
2. 2.You shall pay a monthly rental rate of P12.15 per
square meter or an aggregate monthly rental
amount of P886,950.00;
_______________
1 Penned by CA Associate Justice Bienvenido L. Reyes, with then
Associate Justice, now COMELEC Commissioner Romeo A. Brawner
and CA Associate Justice Mario L. Guaria III, concurring; p.
34, Rollo.
516
516 SUPREME COURT
REPORTS
ANNOTATED
Philippine Ports Authority vs.
William Gothong & Aboitiz
(WG&A), Inc.
1. 3.All structures/improvements introduced in the
leased premises shall be turned over to PPA;
2. 4.Water, electricity, telephone and other utility
expenses shall be for the account of William,
Gothong & Aboitiz, Inc.;
3. 5.Real Estate tax/insurance and other government
dues and charges shall be borne by WG&A.
The said contract was eventually conformed to and signed
by the petitioner company, through its President/Chief
Executive Officer Endika Aboitiz, Jr. Thereafter, in
accordance with the stipulations made in the lease
agreement, PPA surrendered possession of the Marine Slip
Way in favor of the petitioner.
However, believing that the said lease already expired
on June 30, 2001, respondent PPA subsequently sent a
letter to petitioner WG&A dated November 12, 2001
directing the latter to vacate the contested premises not
later than November 30, 2001 and to turnover the
improvements made therein pursuant to the terms and
conditions agreed upon in the contract.
In response, petitioner WG&A wrote PPA on November
27, 2001 urging the latter to reconsider its decision to eject
the former. Said request was denied by the PPA via a letter
dated November 29, 2001.
On November 28, 2001, petitioner WG&A commenced an
Injunction suit before the Regional Trial Court of Manila.
Petitioner claims that the PPA unjustly, illegally and
prematurely terminated the lease contract. It likewise
prayed for the issuance of a temporary restraining order to
arrest the evacuation. In its complaint, petitioner also
sought recovery of damages for breach of contract and
attorneys fees.
On December 11, 2001, petitioner WG&A amended its
complaint for the first time. The complaint was still
denominated as one for Injunction with prayer for TRO. In
the said amended pleading, the petitioner incorporated
statements to the effect that PPA is already estopped from
denying that the correct period of lease is until such time
that the North Harbor Modernization Project has been
bidded out to and operations turned over to the winning
bidder. It likewise included, as its third cause of action, the
additional relief in its prayer, that should the petitioner be
forced to vacate the said
517
VOL. 542, JANUARY 517
28, 2008
Philippine Ports Authority vs.
William Gothong & Aboitiz
(WG&A), Inc.
facility, it should be deemed as entitled to be refunded of
the value of the improvements it introduced in the leased
property.
Following the first amendment in the petitioners
complaint, respondent PPA submitted its answer on
January 23, 2002. Meanwhile, the TRO sought by the
former was denied by the trial court by way of an order
dated January 16, 2002.
Petitioner later moved for the reconsideration of the said
Order on February 11, 2002. Shortly thereafter, petitioner
filed a Motion to Admit Attached Second Amended
Complaint. This time, however, the complaint was already
captioned as one for Injunction with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction
and damages and/or for Reformation of Contract. Also, it
included as its fourth cause of action and additional relief in
its prayer, the reformation of the contract as it failed to
express or embody the true intent of the contracting parties.
The admission of the second amended complaint met
strong opposition from the respondent PPA. It postulated
that the reformation sought for by the petitioner
constituted substantial amendment, which if granted, will
substantially alter the latters cause of action and theory of
the case.
On March 22, 2002, the respondent judge issued an
Order denying the Admission of the Second Amended
Complaint. Petitioner filed a motion for reconsideration of
the aforesaid order but the same was again denied in an
order dated April 26, 2002.2
Herein respondent WG&A then filed a petition
for certiorari with the CA seeking the nullification of
the aforementioned RTC orders.
In its Decision dated October 24, 2002, the CA
granted respondents petition, thereby setting aside
the RTC orders and directing the RTC to admit
respondents second amended complaint pursuant to
Section 3, Rule 10 of the 1997 Rules of Civil Procedure.
Petitioner moved for reconsideration but the same was
denied per Resolution dated May 15, 2003.
Hence, the present petition where the only issue
raised is whether the CA erred in ruling that the RTC
committed grave
_______________
2 Rollo, pp. 35-37.
518
518 SUPREME COURT
REPORTS
ANNOTATED
Philippine Ports Authority vs.
 William Gothong & Aboitiz
(WG&A), Inc.
abuse of discretion when it denied the admission of the
second amended complaint.
The Court finds the petition without merit.
The CA did not err in finding that the RTC
committed grave abuse of discretion in issuing the
Order dated March 22, 2002 denying the admission of
respondents second amended complaint.
The RTC applied the old Section 3, Rule 10 of the
Rules of Court:
Section 3. Amendments by leave of court.after the case is
set for hearing, substantial amendments may be made only
upon leave of court. But such leave may be refused if it
appears to the court that the motion was made with intent
to delay the action or that the cause of action or defense is
substantially altered. Orders of the court upon the matters
provided in this section shall be made upon motion filed in
court, and after notice to the adverse party, and an
opportunity to be heard.
instead of the provisions of the 1997 Rules of Civil
Procedure, amending Section 3, Rule 10, to wit:
SECTION 3. Amendments by leave of court.Except as
provided in the next preceding section, substantial
amendments may be made only upon leave of court.
But such leave may be refused if it appears to the
court that the motion was made with intent to delay.
Orders of the court upon the matters provided in this
section shall be made upon motion filed in court, and after
notice to the adverse party, and an opportunity to be heard.
The Court has emphasized the import of Section 3,
Rule 10 of the 1997 Rules of Civil Procedure
in Valenzuela v. Court of Appeals, thus: 3
Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil
Procedure amended the former rule in such manner that
the phrase or that the cause of action or defense is
substantially altered was
_______________
3 416 Phil. 289; 363 SCRA 779(2001).
519
VOL. 542, JANUARY 519
28, 2008
Philippine Ports Authority vs.
William Gothong & Aboitiz
(WG&A), Inc.
stricken-off and not retained in the new rules. The clear
import of such amendment in Section 3, Rule 10 is
that under the new rules, the amendment may (now)
substantially alter the cause of action or
defense. This should only be true, however, when despite
a substantial change or alteration in the cause of action or
defense, the amendments sought to be made shall serve the
higher interests of substantial justice, and prevent delay
and equally promote the laudable objective of the rules
which is to secure a just, speedy and inexpensive
disposition of every action and proceeding. 4
The application of the old Rules by the RTC almost
five years after its amendment by the 1997 Rules of
Civil Procedure patently constitutes grave abuse of
discretion.
 WHEREFORE, the petition is DENIED for lack of
merit. The Decision of the Court of Appeals
promulgated on October 24, 2002 and its Resolution
dated May 15, 2003 are hereby AFFIRMED in toto.
SO ORDERED.